A friend has informed me of a trojan horse making its rounds via ad networks currently. We've nicknamed it "Proffy" as the domain name that loads the ad is proffy209.com.

It's a very large buy that has been seen running on several mid-size ad network and through seedcorn. Loading the ad in a new window causes the browser to immediately close and windows registry becomes infected imediately with adware/spyware.

This tag http://c5.zedo.com/jsc/c5/ff2.html?n=377;c=81;s=36;d=22;w=800;h=600 has rotated out the following - http://proffy209.com/adv/096/new.php. DO NOT LOAD THIS LINK. Another link is http://redirect.msupdate.net/pops/seedcorn01xp.html. Again DO NOT LOAD THIS LINK.

If Google is the king of search, then MySpace is the king of the impression. Analysts, journalists, and all other sorts of “ists” have for years closely tracked the percentage of queries that each of the major search engines receives, but with the advent of MySpace, the “ists” have started to treat the percentage of ad impressions by site as more than just a passing statistic. For MySpace, what was a 10% share of the ad impression market at the beginning of this year has jumped to a 17% share of the market, and it’s a trend that doesn’t look to slow.

The top sites online have always accounted for the majority of ad impressions, but just how many is almost mind-numbing. Assuming the Nielsen//NetRatings AdRelevance numbers reflect somewhat accurately the actual landscape, Yahoo Mail and Hotmail account for more than 45% of all ad impressions, with Yahoo owning a whopping 38% in May 2006 and Hotmail 8% during that same time period. MySpace during that month had a little more than 14%, but the landscape continued to shift again in June 2006 with MySpace up to 17% and Yahoo down almost three percentage points and Microsoft losing one.

MySpace’s growth and its impact on Yahoo and Hotmail among other sites tells only part of the story. The other part of the story deals with addressing the increased flak the social networking giant attracts as its share rises. This has nothing to do with its content and everything to do with revenue. Critics and living room referees everywhere keep calling MySpace an ad dud because of its incredible portions of remnant inventory that attract only low dollar CPMs. The missives come even with the company steadily increasing its ad revenue which several have pegged to hit $200 million this year.

Two hundred million is a nice chunk of change, and compared to its 200 or so employees even implies decent efficiency. It’s only because of the sites share of users and impressions that others feel it should do better. The question is, should it? I’m not so sure that it should. Like MySpace, Yahoo Mail also has a relatively low CPM, especially when compared to other places on Yahoo, and there is a reason that Yahoo Mail and MySpace rank numbers one and two. Both are communication destinations. It took me a while to realize this and someone smarter than I suggesting it, but I’ve bought in to the theory. MySpace has grown so much and has taken away share from Yahoo Mail because it improves upon how people communicate online. It’s not about social networking but interacting with your network.

Unfortunately for direct marketers though, aside from a select few incentivized promotion ones, MySpace inventory does not convert. And despite the abundance of mortgage and education offers running on Yahoo Mail, a company cannot simply put up one of those ads and have it work. The same is doubly true of MySpace, as its younger audience often means that you won’t find it adorned with LowerMyBills ads. So, for all its clout, the site remains in many ways off limits to most direct marketers. And, unfortunately, it doesn’t seem like that will change. In fact, many sites have got their 1999 going on and seek to woo the brand marketers.

Even Google with its latest landing page change seems to have sent a not so subtle “you’re expendable” message to direct marketers. As someone on Webmasterworld pointed out, Google has in many cases more demand than they do supply. Except for people in the space, nobody is really looking four pages deep just for the ads. And they too have potentially conflicting interests. They want the brand marketers, but they also want to see their own CPA advertisers do well. There is, however, some light at the end of the brand and run of network tunnel, behavioral marketing.

To date, talk of behavioral marketing has primarily focused on the brand marketers. Companies like Revenue Science have sophisticated tools for brand heavy web sites such as the Wall Street Journal that allows them to find high value users elsewhere on their site and show them a higher paying ad instead of a lower paying one. Helping sites make more from their own advertiser base is only one of the benefits of behavioral targeting. Another big advantage comes by helping add context to users as they visit non-relevant sites. Many of the larger behavioral targeting companies and networks with such targeting partake in this making sense of the web activity. They place tracking pixels across content sites so that they can show more relevant ads when they see a user on a less relevant site.

Direct response fits into the behavioral equation because by adding that layer of understanding prior to showing the ad, advertisers see increased conversion rates, and that is good news. Brand might be the low hanging fruit for behavioral marketing, but a company that can act as a platform for those in the direct marketing space could end up owning the tail of the big sites’ impressions, and with behavioral targeting added, direct marketers could stay competitive in many inventory situations. It will be a win-win as brand marketers will only buy so many impressions, and direct response marketers will look for new ways to reach the “remnant” as they no longer can afford to blanket the Internet by going direct to the big sites. Behavioral targeting and a behavioral targeting firm could end up being the Google for banners ads – being the marketplace and the gateway for users.

Those on Google's Inside Adwords list, inside-adwords@googlegroups.com, saw a brief flaw in Google's shining armor. Their mail handler seemed to have allowed messages from anyone to be blast to whole list. For about ten minutes those on the list learned who was out of the office and who was pregrant. The problem was solved but not in time before at least person could solicit business.

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I think many of us dream about getting a new car; we listen to the radio and will pay attention to the deals and see both the national and regional advertisements. The problem with this is that I believe most people do not buy a car on impulse. It’s great knowing that such and such dealer is having a 48-hour sale, but that will only lure the person in the buying moment. It won’t lure the rest of the people who might even be within 60 days of buying. This approach is more like bobbing for apples; you might get someone, but you will end up wasting so much of that airtime on those you cannot impact.

At the very least someone should create a site that maps the specials by region. Let someone put in their city and they can see a dealer by dealer plot showing their historical sales in order to help people proactively plan the process. Make it collaborative so that others can contribute when they see a deal, and of course allow dealers and auto makers to enter their own. It’s a coupon site for cars, and it’s not too different than an idea that has lurked inside my head for more than a year. I named it CarMaps.net, and I conceptualize it is a meta-search engine for cars that takes in data from local and national sources, from individual sites and from aggregators; then displays it visually.

In some ways, that makes CarMaps.net a quasi-Google mashup like HousingMaps.com. It has also been my opinion that people don’t just search for cars by brand; they search for brand and convenience. Being able to see what is near, to see and feel the landscape would make for a more efficient car buying experience. Coincidentally, it also makes for a rather effective site to monetize. The data could come simply by mining it, and revenue could come without a sales force. People buying a car will invariably want to receive a quote, find out about insurance, and financing. All of these can be readily found in the performance marketing space today. But as much as I like that idea, it’s small change and a mere set up for the idea of this “What If?”

For as much as I like cars, I do not particularly enjoy the car buying experience. For the past four and a half years, I have not had to think about it. I have been happily engaged in my almost paid off automobile that takes me from A to B and makes the weekend trips to C, D, E, and F pleasant. That changed July 4 when I was rear-ended on my way home from watching fireworks, and it was bad enough that the insurance without my influence declared the car a total loss. (To those who are asking in their heads if I am alright, thank you. I walked away.).

With my car gone, I have to look for new transportation. I would enjoy this, except I do not want a payment, which is why I kept and planned on keeping my car. So, for the past several days, I have been immersed in the auto buying experience. Most of my time has been spent on sites like autotrader.com, leasetrader.com, cars.com, along with local dealer listings. For the fist time, I spent some significant time on eBay Motors.

As is the case with other parts of eBay, both private sellers and full-timers, be it individuals or companies, can, and do, leverage the marketplace that eBay provides. Surprisingly, even large ticket items such as cars, nice ones too, get sold every day via the marketplace. I know one guy in the office who has purchased several cars off of it, and I remember from several years ago hearing that smaller car places, especially the used-car, corner lot ones, found it a good way to sell. The auction model can lead to high prices, and that car prices are inherently impossible to fully estimate and often subjective (not like a pound of strawberries) has them sharing necessary qualities with other items that do well.

What the cars section (not parts) does not have are two things. The first is the equivalent of a sales assistant, the way other parts of eBay can leverage third-party sites like “I sold it on eBay!” and Auction Drop. Having places like that could help insure consistency of the product, much like when by focusing on items with SKU’s, Half.com found itself creating a billion dollar gap in eBay. A service like this alone I think would do very well as it increases the selection of items available. With more product, we get more people and together we get a more liquid and efficient marketplace. It’s the next logical step and a bigger purchase price. It also means that the places do not need to carry inventory, which they do today.

A listing service for eBay Motors solves an essential piece, but it does not provide a complete solution. In addition to finding the car, seeing the car, and reading about it in detail, potential buyers want security. This is what makes sellers such as autoworldofspringfield such a success. They provide all of this. The downside to them is that they are but one store. They operate more efficiently than most, but they themselves do not scale easily. What if there was a way to cover 80% of what they offer in scale? I think there is, and it’s called CarMax.

In many ways CarMax and eBay Motors compete. Each tries to be a marketplace for automobiles and offers among the best reach of any other sellers. Separately, they are limited, and CarMax either does not, or is prohibited from bidding on eBay. But, CarMax offers something that eBay itself can’t, and that is certainty. They have developed not only a liquidity model for cars owners looking to sell but a standardization process for car buyers, which provides a feeling of uniformity across a wide range of inventory.

With a combined CarMax/eBay Motors, you have a place where in major markets sellers of cars can drop them off, receive either payment in advance (a reverse buy it now) or have the car on auction and receive an amount less CarMax’s fees, which could be a percentage or flat rate. For buyers, it would mean the greatest selection of cars, and in some markets, local pickup. The major change I would make to the two is to move all buying online so that CarMax interacts with people in one piece of the process, not both. They become the Netflix warehouse in a way, not the Blockbuster store. Like eBay, CarMax deals with physical goods and in a more marketplace like dynamic than any other place. Best yet, at $3.6 billion, they are affordable, for eBay… or maybe for Yahoo. It’s a slightly different paradigm than spending $4 billion for a little piece of chat software.

This week’s Digital Trends explores the phenomenon known as the Long Tail, a phrase and now book by Wired editor-in-chief Chris Anderson, first published as an article for the magazine he heads in October 2004. Part 1 of Digital Trends explores the origins of the term and its mathematical origins in what the numbers guys’ call power law functions. It also mentions one of the more common rules of thumb, the 80/20 rule, which also behaves according to a power law function. Part 1 finishes by highlighting the main idea of the Long Tail, that it represents a new way of thinking about a number of markets, one rooted in opportunity by servicing the full range of options not just the few. Here in Part 2 we dig further into the mechanics of the Long Tail by elaborating on its components and trying to explain when tail opportunities exist.

Fig 1.1 – Graphical representation of the long tail, a power law function.

The Head: The items in this region constitute a) at worst, what Mr. Anderson describes as the lowest common denominator that we have had to accept (often due to real world constraints such as proximity and/or shelf space), and b) less unflatteringly, which is what we see in the search world, the limitation of our mind; it’s the keywords that we can think of given time constraints and a lack of tools. In closed systems such as a set advertiser base, the head would constitute 80% if not more of the volume, but if more open, liquid systems (stocks, keywords, etc.) the head constitutes often less than half.

The Tail: this section contains the full representation of supply; it would be all the movie titles made throughout the world, all the books, all the music, and with respect to paid search, all active keywords. As Mr. Anderson explains, these contain the non-hits that stores couldn’t carry but that given access, users prove they still desire. In some cases the tail can follow the Pareto principle making up a fifth, but in many cases it exceeds the sum of those items in the head.

Wired’s Chris Anderson provides three rules in his seminal Wired Magazine article extrapolated from the success of tail companies. Below is our more Internet advertising centric checklist for helping to identify the key components of a Tail economy.

Large audience – while the tail speaks to the viability of niches, you still need volume. Without a large cumulative audience, the type of activity in the tail will not exist. DVD rental, music downloads, all qualify; whereas a niche like knitting would make up a group within a larger segment; it is not large enough to have its own Tail economics, at least not in scale. Netflix can leverage the tail because it can aggregate demand more efficiently than a retail location can. Its “stores” are its warehouses which no human sees, and instead of needing five, ten, twenty stores for a given region, it’s direct to consumer approach means it needs just one store for a major city, which means that it can fulfill component two, more choices.

Lots of choices – the tail notion works because an actual tail exists. In an environment of only 100 choices, there is no tail. The more that number grows, the more likely the tail becomes. There isn’t a magic number, i.e. 1,000 or even 100,000. In the case of paid search, the inventory is words in any given language. This means, and it is the case, that search engines like Google actually stock millions of choices; it's why search makes for such a promising tail economy. It has a natural tail, an incredibly long list of choices, many of which receive little activity in a month. The more naturally occurring choices, the longer the tail, and the greater the opportunity, which means that breaking the 80/20 rule might be harder but more rewarding when it comes to search.

Search driven – requiring that user action be search driven suggests a slight departure from most discussions on the tail, and it could be argued that being search driven is optional, in describing a market/system/opportunity more examples than not seem to fit this. Search driven is the reason that Netflix can monetize the tail but broadcast television cannot. One matches user intent to the universe of options whereas the other tries to map a narrow band of options to user intent. Being search driven means allowing user intent to provide the starting point and a company trying to meet it rather than actively get customers for its selection. Companies can still do well with a narrow approach, but they won’t mine the tail, and their business could always come under pressure if it looks more like a tail economy, i.e. lots of buyers, lots of choices, and the next point, room for aggregation.

Aggregation (Information asymmetry and facilitation) – one thing that makes tail economics, i.e. making more off the non-hits than the sum of the hits is a general lack of consumer awareness. In his article on the Long Tail, Mr. Anderson describes the case with Amazon and two books, one mainstream the other not. Its recommendation engine picked up that the more obscure book overlapped with the more popular one; users agreed and almost overnight, a non-seller became a source of revenue. The key takeaway is the existence of related intent, that items in the tail (in the exhaustive list of non-sellers / non-hits) map to those in the head group, in the big sellers. Amazon could make money without helping facilitate the mapping, but it makes much more because it does help map demand with supply. Doing that requires the final item, technology.

Role of technology as facilitator – technology plays a crucial role in making Long Tail Economics possible. This takes place on two levels – the virtual store and the matching engine. Virtual stores can house more options than their physical “big box” counterparts. For example, Netflix can carry more titles than a local Blockbuster, and this is because a Netflix store has more customers than a local store; by having a virtual store, their coverage can be whole cities, and because their one to two business day approach means they need only a handful of “stores” to cover the whole US. Follow that logic and we see how each store can house thousands more titles. Secondly, companies that can service their customers without maintaining a retail store can start to play an active role in matching available supply with the demand. Amazon and Apple do this with their recommendation. Google, who has millions of titles, doesn’t have such an engine, which opens the door to specialists to figure out the relations, i.e. “mine the tail.” None of that would be possible, though, without technology.

In the end, talk of the long tail is about being able to make money from a wider range of products than was the case prior to doing business online. Long Tail Economics means leveraging technology to turn the classic 80/20 model on its head, about viewing opportunity as an iceberg. Embracing The Long Tail involves challenging us to rethink our notion of the fringe. The power is now in the 20 not the 80. With The Long Tail, 20 really equals 40, 50, or even 60. Long Tail Economics applies for many things, but it is not the magical solution to every business, only a way to view the world as having more choices and that having more choices can mean more money not less.

Tail talk is all the rage right now. Here is something I wrote last week on that subject, taking solice in my originally composing it prior to the mainstream barage.

It begins with this...

At some point last year, I realized just how little I knew about the Internet. I had lived in a world that dealt originally with email advertising in newsletters to registration paths. I grew up, if you will, in a time where search had yet to prove itself and the rest of us had our heads down trying to find a way to make a buck. We didn’t think about the next big thing, and spent little time trying to understand the changing landscape. Yet, the changing landscape is exactly what provided many of us an opportunity in the first place. It’s only natural that as the web changes again, a new type of opportunity exists. Chris Anderson, editor-in-chief of Wired Magazine, coined the phrase which describes among the leading, if not at the very least most talked about, type of opportunity in today’s changing landscape, The Long Tail.

By now, it’s almost expected that everyone know about the long tail, the term itself having almost become hackneyed. The reality is that not everyone does, just as I had no idea what tagging or even Flickr was not ago. Not being a statistician, economist, or formerly schooled in business, it took some digesting the concept. Now, I find myself using the notion of The Long Tail quite frequently. For those who have, no doubt, heard of this long tail mumbo jumbo and wanted to know more, only to be overwhelmed by the academic and industry information on the topic, these two articles are for you.

Like many people, I found myself heading (via Google incidentally) to Wikipedia, and in reading their summary of The Long Tail, another concept worth covering comes up first – the 80/20 rule, also known as the Pareto principle. Older and more widely used than The Long Tail, it has equal if not greater addictiveness. Once used, you will hold yourself back from finding examples of it in life and using it in work. In short the Pareto principle is an extrapolation of the finding by Italian economist Vilfredo Pareto that 80% of the income in Italy was earned by only 20% of the people. If you work at an ad network, just think of your clients; chances are a handful of the publishers drive the majority of the volume; similarly, the majority of revenue comes from a handful of advertisers.

The Pareto principle is known as a “power law” function for the shape of the graph and the unequal weighting of one side of the curve. Power law functions look like the right half of the bell shaped normal curve, but with an even steeper initial drop. Think of a plastic drawing aid that helps create quarter-circle images. (There is a nice looking example in Part 2.) Power law functions, especially the Pareto principle have increased in popularity as more and more systems seem to follow this type of distribution. There are books, seminars, you name it on how to apply the Pareto principle to your life.

What the Long Tail author Chris Anderson suggests is that technology has started to change the power law curves that define so many of life’s systems. In other words, no longer do many systems we thought followed the 80/20 rule have to. He gives the example of Robbie Vann-Adib, CEO of Ecast who asks "What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?" The right answer according Vann-Adib and the article is not what most would think, this is to say that it no longer has to fit within the 80/20 paradigm. As to how many will rent, it turns out almost 99% will. That demand fits across a wider spectrum than previously imagined talks to only one piece The Long Tail economics. The other major component comes when you combine the size of the 20, the non-hits (to use music speak), i.e. the tail. The sum of the tail can equal and exceed the sum of the head, the assumed threshold for worth.

Creating and capturing the tail is big business. Take this example given by Mr. Anderson: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon's book sales come from outside its top 130,000 titles. All of the sudden, the small guys mean something, and it’s only possible through technology. The top businesses online today all leverage the tail, be it Google and its aggregation of advertisers or eBay and its aggregation of products. In his mind, The Long Tail is about three things – 1. Making everything available, 2. Low prices, and 3. Helping consumers find information. In Part 2 of this week’s Digital Trends, we continue with the idea of The Long Tail and take a straightforward approach to its components and our take on how to identify such a system.

This post is about an idea for a site; it's by no means my grandest, that is to say don't expect a hundred million dollar business; in fact this idea might struggle to simply become a widget on an already existing site. (Although I bet it could make for an entertaining TV show - in studio or visiting people's houses.) Either way, it would help me and in my non-technical mind should not be that hard to build.

Context - For the next three months, my girlfriend will be out of the country. Not that she necessarily cooks, but her absence has had me paying even closer attention to the food in the fridge, or lack thereof. I am reminded of her mother, an excellent cook, who seemingly could whip up food from anything in there. This is what I'd like to replicate.

The idea is a cooking site that takes the traditional model and flips it on its head. Instead of searching for recipes, this site would allow you to enter what ingredients you haveand spit out recipes that you could make. It would have selection boxes for spices in the house and other condiments, fields to select the quantity, and overall try to streamline the entry process. With this site, though, someone like myself could enter say - ground beef (.5 lbs), jack cheese, onion (1), garlic (1), cherry tomatoes (4), black beans (16 oz), romaine lettuce (2 stalks), basil (1 oz), etc. and produce something actually edible. It could also suggest alternate recipes if you wanted to pick up a few more ingredients, e.g. "To make XYZ, purchase the following." If it's good enough, it could actually motivate someone to go the store.

If I'm the only one with random ingredients in their fridge or the only one that buys what I think looks good without much thought on what to make, then this site might not do so well. Here's hoping I'm not the only one... Hint, Hint.

Exitcution is all about how a company handles growth. Exitcution deals with not just how companies handle growth but whether they will continue to grow. It's part strategy and an even bigger part execution. With respect to those in the internet advertising space, exitcution revolves around an idea I first read about in The Tipping Point, the Rule of 150. Part 1 of this piece discusses in greater detail the Rule of 150, which in short specifies the maximum size of a group. Anything bigger and communication and cohesion can break down if not handled properly. In the internet advertising world, that Rule of 150 coincides with the $100 million revenue hurdle. When companies reach these benchmarks, the challenge of exitcution arises.

Here in Part 2, three graphs tell the story of exitcution. The first is the Static Scenario.

Figure 1.1 Static Scenario

The Static Scenario is what many of us fear. It begins with the rapid growth but ends in a flatline. It can happen for a variety of reason, especially when a company might have too great an exposure to a channel with volatility, e.g. email. A company could have had a strong presence in email but have been hurt in phases two and three by legislation and the filters. Additionally, the latter stages involve operating in a more mature market where it’s harder to find pockets of undermonetized inventory. Very likely too, in addition to product exposure / weakness, are operational issues. Companies in this state grew by the seat of their pants, but didn’t manage that growth internally. They did not develop a hierarchical business; theirs is most likely flat with one, maybe two decision makers, making them more akin to a hunting and gathering society, i.e. they hit their breaking point.

Figure 1.2 The Decline Scenario

If the Static Scenario is what many fear, the Decline Scenario might as well be a heart attack. Yet, it is a very real possibility for some. Without proper strategy, reinvestment, and a focus on building the metaphorical railroad tracks well in advance of the train needing them, a company can find it lacking the ability to keep customers and stay competitive. Especially in our space, which now, more than ever, requires a strong technology expertise. Companies that choose not to develop that expertise can find themselves quickly outdated. Going back to the railroad analogy; so many companies during the boom were like trains going downhill trying to lay the tracks at the same time. As they hit the bottom of the hill and the frantic pace slowed, many should have started to scout ahead, to look for potential ravines and lay alternate routes. Those that coasted are those that we see in the Decline Scenario.

Figure 1.3 The Growth Scenario

Those companies that have the proper balance of strategy and execution can ride the momentum, still, and carry that into a new phase of high growth. For many companies that succeeded by not having a strategy, just executing, doing this can present a daunting task. Doing it right though, means they will control their destiny and put themselves into a position to start locking out others and consolidating the market. In my opinion, that period of exitcution defines whether they make it or not. The companies that do, have not just focused on scalable technology to take advantage of the market; they have built their internal infrastructure – the process and workflow – to be equally scalable.

Some companies that flat line and some that decline will immerge, transforming themselves into growth success stories, while some growth companies will err and join those in the flat line or decline sector. Right now, we have some huge success stories and companies that show the importance of understanding The Rule of 150. Those that do, might become the next Gore Associates - a very profitable, growing enterprise where coincidentally people want to work and turnover occurs one-third less often. For those facing the 150/100, it's all about exitcution.

In The Tipping Point, Malcolm Gladwell writes, “There is a concept in cognitive psychology called the channel capacity, which refers to the amount of space in our brain for certain kinds of information.” Channel capacity helps explain why so much of what we can remember falls in between six and fifteen units. There is a reason, for example, why phone numbers started out with seven digits. It turns out that studies showed people had a difficult time remembering accurately more than that without making mistakes. As Mr. Gladwell writes, “Perhaps the most interesting natural limit, however, is what might be called our social channel capacity.”

Gladwell quotes British anthropologist Robin Dunbar in that “The figure of 150 seems to represent the maximum number of individuals with whom we can have a genuinely social relationship, the kind of relationship that goes with knowing who they are and how they relate to us…it’s the number of people you would not feel embarrassed about joining uninvited for a drink if you happened to bump into them in a bar.” The Rule of 150 holds true in everything from hunter gatherer societies to armed forces fighting units. The Rule of 150 even applies to businesses, the non-military “company” as they too are a group of individuals. The Rule of 150 matters because once groups get beyond that size, people start losing the natural closeness and divisions start to occur. It matters to us because many in our space have started to come up against that imaginary barrier, and success or failure will depend on their ability to navigate through this.

The Tipping Point highlights one company that has navigated through the issue of 150, the Gore Associates, makers of Gore-Tex waterproof fabric and Glide floss to name a few. They have many more than 150 people, but behave like a small entrepreneurial start-up, and they succeed, including being consistently named one of the top companies in America for which to work. Founder, Wilbert “Bill” Gore once said, “We found again and again that things get clumsy at a hundred and fifty.” Each of their plants contains just enough space to house 150 people, and other plants can stand just a parking lot away. At Gore, when one group grows too large, it splits. It's a company that has figured out how to manage growth and continue to scale. Those in our space are not immune, and the 150/100 refers to the plateau that many seem to hit, how to grow past beyond the 150 person range and/or the 100 million in revenue mark.

The Internet advertising arena contains many companies that share a similar history. Most began during the downturn when users still came online in masses even though so many companies began to fall by the wayside, all of which equaled a rather fertile environment. Those who took this chance included the one or two co-founders who ultimately began some of today’s top performance advertising firms with little to no funding, just a belief that money existed for those willing to earn it. And judging by the results, they were right about the opportunity, and the money.

These once scrappy companies out to make a buck, now find themselves facing an even more challenging face, maturity. Besides their origin, another thing seems to define them. Each has grown over the past four to six years to, as mentioned above, roughly 150 people and has crossed the $100 million mark in revenues. And each, after heavy growth, now finds themselves facing the hardest challenge to date, finding a way to sustain the growth, i.e. finding a way to overcome the 150/100 hurdle.

I show in Part 2 three diagrams, each representing a potential scenario for those facing the 150/100.

The Static Scenario

The Decline Scenario

The Growth Scenario

Each of the three scenarios has four sections

Section 1 – Growth. This is the period that happened during the first two to three years where companies increased revenues and cash flow by two plus times year over year.Section 2 – Normalization. Here growth still outpaces the industry as a whole but it slows from the sometimes 1000% growth of periods past.Sections 3 and 4 – Exitcution. This is where companies will either make it or they won’t. It is all about execution. Companies exit their first phase of high grown and will either flat line, decrease, or enter their next phase of growth.

Continue to Part 2 of “Exitcution” for the illustrations and conclusion.